News Digest: Economy & Development (January 06 – 12, 2022)

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Money and Banking

Commenting on the current economic situation in the Public Accounts Committee of the parliament on 09 January 2022, Governor of the central bank (NRB) affirmed that attaining the economic growth target of 7 percent and maintaining an inflation rate of 6.5 percent will be a challenging task in the current fiscal year (FY) 2021/22, due to the looming third wave of Covid-19 pandemic.

A new ‘Unified Directives’ issued by NRB on 07 January 2022, has reduced the amount of foreign currency that importers of agricultural goods can buy from banks to pay their imports bill. Amid the depleting foreign currency reserves, NRB has also decided to not provide foreign currency more than twice a year to people travelling outside Nepal.

Finance Minister Janardan Sharma has urged Nepali migrant workers living aboard to open USD accounts in Nepal to help generate investments and employment opportunities in Nepal. For the same, NRB has reduced the fee for opening an USD account from USD 10,000 to USD 5,000.

According to the Nepal Bankers Association (NBA), deposits at banks and financial institutions (BFIs) has increased by Nrs. 58 million during the first week of January 2022 whereas credit disbursement during the same review period stood at Nrs. 9 billion.

Bagmati Province’s Ministry of Labour, Employment and Transport has revised the taxi-fare, three months after raising the bus fare inside the Kathmandu Valley. According to the new revision, the flag-drop charge has been hiked to Nrs. 60 from Nrs. 14 and the normal fare to Nrs. 9.80 per 200 metres after the first 1 kilometer from the existing Nrs. 7.80. The fares are expected to come into effect from 15 January 2022. 

Agriculture and Farming

A cabinet meeting on 06 January 2022 has decided to increase the minimum support price (MSP) of sugarcane by 8.39 percent to Nrs. 590 per quintal for the upcoming harvest season starting November 2022. The new price tabled by the Ministry of Industry, Commerce and Supplies (MoICS) also includes a government subsidy of Nrs. 70 per quintal to be provided to sugarcane farmers.

Trade and Infrastructure

Nepal Power Exchange Limited and India’s Manikaran Power Limited on 10 January 2022 signed a memorandum of understanding (MoU) on energy trading. The MoU has ended the monopoly of Nepal’s state-owned utility- Nepal Electricity Authority in energy trading.

According to the Economic Activities Report (Integrated) 2020-2021 report published by the Nepal Rastra Bank (NRB) on 09 January 2022, the average capacity utilization of industries during the last fiscal year (FY) 2020/21 stood at 52.2 percent, which is an increment of 3.8 percent as compared to fiscal year (FY) 2019/20.

The Ministry of Industry, Commerce and Supplies (MoICS) has reviewed the Nepal Trade Integration Strategy (NTIS) for the third time (since its inception in 2010) after it failed in boosting export of domestic products at the international market. Lack of coordination between government bodies and delay in implementation of tax waiver (as stipulated in the national budget) has been identified as the main reason for the recent failure in performance of NTIS listed products.

A probe committee formed by the Ministry of Culture, Tourism and Civil Aviation (MoCTCA) to carry out an investigation into the building of a restaurant inside Narayanhiti Palace Museum has submitted its report to the government. According to the report, the erstwhile government of KP Oli had given permission to Batas Group to run a restaurant inside the palace within 6.34-acre land. However, the group commenced building its infrastructure over 14 ropanis of land against the actual agreement, signaling land encroachment and irregularity.

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